New management at the collapsed crypto exchange FTX said it would try to recoup donations made by Sam Bankman-Fried and other executives, which include tens of millions of dollars in contributions to U.S. politicians and affiliated groups, the Wall Street Journal reported. The Securities and Exchange Commission said in a lawsuit last week that customer assets were used to make investments, real-estate purchases and large political donations. Mr. Bankman-Fried was charged last week by federal prosecutors with secretly diverting customer funds from the exchange to an affiliated trading arm. He is currently being detained in the Bahamas, where he and FTX were based. In a statement, the new management of FTX said it has been approached by a number of recipients of contributions and other payments that wanted to return the funds. The company, now led by Chief Executive Officer John J. Ray III, said other recipients should also contact it about returning the payments.
Bitcoin mining firm Greenidge Generation came to an agreement with its lender, NYDIG, about restructuring $74.7 million of debt, though a bankruptcy is still on the cards, CoinDesk.com reported. Cash burn is unsustainable and the firm's board is engaged "in active discussions about the potential for, and timing of, a voluntary bankruptcy filing," Greenidge said in a filing yesterday with the U.S. Securities and Exchange Commission. If the deal with NYDIG is finalized, Greenidge still needs $20 million in fresh funding through 2023 to avoid bankruptcy. Under the deal, which is currently in the form of a non-binding term sheet, NYDIG will purchase 2.8 exahash per second (EH/s) worth of Greenidge's bitcoin mining machines, and extinguish $57 million to $68 million of the debt. That will leave Greenidge with 1.2 EH/s of machines, and the miner will also pledge the rest of its unencumbered assets to secure the rest of the loan, which will be somewhere between $6 million to $17 million. The loan in question had about $74.7 million outstanding as of Sept. 30. Prior to reaching a deal with NYDIG, Greenidge had estimated it would have to spend a minimum of $66.5 million in principal payments throughout 2023.
FTX founder Sam Bankman-Fried inched closer to being transferred into U.S. custody to face criminal charges related to the cryptocurrency exchange’s collapse, after a chaotic court hearing in the Bahamas yesterday in which his local lawyer appeared at odds with his U.S. legal team, the Wall Street Journal reported. Bankman-Fried has agreed to be extradited and plans were being fleshed out by his legal team after the day’s court proceedings. Bankman-Fried’s lawyers hope to have a new hearing on the matter as early as today.
Crypto firm Voyager Digital Ltd said on Monday it will sell its assets to Binance.US in a deal valued at about $1 billion following a review, Reuters reported. Palo Alto, California-based Binance.US, which operates as an independent legal entity and has a licensing agreement with Binance.com, will make a $10 million deposit and reimburse Voyager for certain expenses up to $15 million. Nearly $2 trillion in value has been wiped out from the crypto sector this year on rising interest rates and exacerbating worries of an economic downturn. The slump has eliminated key industry players such as Three Arrows Capital and Celsius Network. However, the bigger blow came after larger crypto exchange FTX filed for bankruptcy protection last month. Its swift fall has also sparked tough regulatory scrutiny of how major exchanges hold user funds. In September, Voyager Digital said FTX won an auction for its assets, in a bid valued at about $1.42 billion after Voyager filed for chapter 11 bankruptcy protection in July.
Revlon Inc., a meme-stock favorite after it filed for bankruptcy in June, said it will likely wipe out shareholders in its chapter 11 restructuring, but that didn’t stop the beauty supplier’s stock from rallying on MondayWSJ Pro Bankruptcy reported. Revlon, controlled since 1985 by billionaire financier Ronald Perelman, will be taken over mostly by lenders, and its shareholders aren’t expected to receive any distribution, according to a proposed restructuring agreement filed on Monday in the U.S. Bankruptcy Court in New York. Shareholders are generally wiped out in bankruptcy cases, except for the rare instances where there is value left over after debt claims are repaid. Revlon saw a surge of market interest after filing bankruptcy in June, closing at prices approaching $9 in August and staying above $4 through much of October despite its financial strains. Individual investors bet on Revlon hoping for a repeat of the Hertz Global Holdings Inc. bankruptcy case. The car-rental company was delisted from the New York Stock Exchange after filing for chapter 11 in 2020, yet the stock was in the money when Hertz left bankruptcy, providing shareholders with more than $1 billion in value. In October, Revlon shares lost more than half their value after the NYSE made its delisting of the company official. Now trading over the counter, the shares closed Friday at 35 cents each. They rallied to as high as $1.37 on Monday and closed at 57 cents, up 63%. Under Revlon’s restructuring deal, top lenders will pick the new board of directors for the reorganized company, which plans to emerge as a private company, court papers show.
Cases can move forward against Alex Jones regarding the nearly $1.5 billion he’s ordered to pay families of Sandy Hook victims over his conspiracy theories about the 2012 school massacre, a federal bankruptcy judge ruled Monday, but the families can’t yet pursue collection efforts against the Infowars host, the Associated Press reported. Bankruptcy Judge Christopher Lopez approved an order that attorneys for Jones, his media company and the Sandy Hook families had all agreed to. The order lifts a stay that automatically halted the cases when Jones filed for bankruptcy. Free Speech Systems, Jones’ media company, is also seeking bankruptcy protection. Judge Lopez approved the order, which prevents the families from pursuing collection efforts, during an hour and a half long hearing that Jones attended remotely. Jones filed for chapter 11 personal bankruptcy protection earlier this month in Texas, citing $1 billion to $10 billion in liabilities and $1 million to $10 million in assets. For years, Jones described the 2012 Sandy Hook massacre as a hoax. A Connecticut jury in October awarded victims’ families $965 million in compensatory damages, and a judge later tacked on another $473 million in punitive damages. Earlier in the year, a Texas jury awarded the parents of a child killed in the shooting $49 million in damages. Read more.
Conspiracy theorist Alex Jones on Monday asked a judge to allow him to take a $1.3 million annual salary from the bankrupt parent company of his Infowars' website, Reuters reported. Jones and his company, Free Speech Systems LLC, both went bankrupt in recent months as they owe families of the 2012 Sandy Hook mass shooting a total of $1.5 billion in damages for falsely claiming the massacre was a hoax. Jones has said he cannot pay those judgments, which came after back-to-back defamation trials in Texas and Connecticut. Jones drew a $1.3 million salary from Free Speech Systems before its bankruptcy, and his attorney asked Bankruptcy Judge Christopher Lopez to restore his salary to that level at a hearing yesterday. Jones has been paid a reduced biweekly salary of $20,000 since his company filed for bankruptcy on July 29, just over a third of what he had been paid before, according to his court filing. Read more.
The developer of “League of Legends,” one of the world’s most popular videogames, wants to end a lucrative sponsorship deal with FTX, saying its association with the bankrupt cryptocurrency exchange is damaging its brand and potentially hurting its upcoming competitive season due to the uncertainty of the funding, WSJ Pro Bankruptcy reported. Riot Games Inc. said in papers filed on Friday with the U.S. Bankruptcy Court in Wilmington, Del., that it doesn’t have time to replace FTX as a sponsor for the 2023 League of Legends competitive season, but wants to end the sponsorship as soon as possible so it can find a new cryptocurrency exchange partner. The League of Legends esports league boasts the third most-watched professional sport in the world among males between 18 and 34 years old, behind only the National Football League and National Basketball Association, Riot said in the filing. The FTX sponsorship was the largest Riot had ever signed for an esport league and represented a critical funding source for compensating its teams, the company said. FTX paid Riot $4 million in 2021 and agreed to pay the videogame maker $12.5 million in 2022 and roughly $12.88 million in 2023, according to a partially redacted copy of the agreement filed in bankruptcy court.
FTX’s U.S. managers are negotiating with Bahamian authorities to resolve a dispute over access to the failed crypto exchange’s electronic records, lawyers said in a court hearing Friday, following weeks of publicly criticizing each other over the handling of FTX’s collapse, WSJ Pro Bankruptcy reported. FTX Chief Executive John J. Ray III and company lawyers met in New York on Thursday with representatives of the Securities Commission of the Bahamas and Bahamian court-appointed liquidators to try to resolve a dispute over sharing information from inside the exchange that is relevant to their investigative work. “While we haven’t come to any conclusions, we did have a productive exchange of views,” FTX lawyer James Bromley said during a hearing in the U.S. Bankruptcy Court in Wilmington, Del. The Bahamian liquidators have sought access to data from FTX’s international trading platform, email records from employees of FTX’s Bahamas affiliate, FTX Digital Markets Ltd., employee Slack chat records, documents stored on a shared company Google Drive and FTX’s QuickBooks accounting system, according to court papers. Their access to the information was cut off by FTX’s U.S. management on Nov. 12, a day after FTX filed for chapter 11, according to their court filings.
